Question

At RM Sharpton Corporation, the engraving department is a bottleneck, and the company is considering hiring an extra worker, whose salary will be $45,000 per year, to mitigate the problem.With the extra worker, the company will be able to produce and sell 7,000 more units per year. The selling price per unit is $12. Cost per unit currently is $7 as follows:Direct material.................. $2.50Direct labor................... 75Variable overhead .............................. 25Fixed overhead (primarily depreciation of equipment)... 3.50Total...................... $7.00

RequiredCalculate the annual financial impact of hiring the extra worker.